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Checking Accounts: How to pick one that’s right for you

Checking accounts are an important financial tool, and choosing a good one can be confusing. Below I’ve broken down some of the key considerations in choosing the right checking account for your needs.

Fees

There has been a lot of stink about fees charged on checking accounts in the last few years, and big banks are largely the culprit here. For instance, Bank of America charges $12-25 per month for their checking accounts unless you meet one of their specific “waiver” criteria like monthly direct deposit or maintaining a minimum balance. If you meet the criteria now, consider if there could be a scenario where you wouldn’t (job loss, financial hardship), such that you would get dinged with a fee down the road.

Credit unions and online banks have heard the outcry and largely offer fee-free checking accounts. If fees are a concern for you, you might want to check out one of those options.

Interest rates

Rather than paying a bank to service your checking account, how about if they paid you interest for depositing your money with them? This is where online banks shine the brightest, largely because of their lower operating costs (from not having brick and mortar locations). For example, Ally Bank pays between 0.10% and 0.60% on all checking account balances (as of 5/5/14). That doesn’t sound like much, but you’d earn $90 on a balance of $15,000 in a year. That’s more than you’d get from an account paying no interest, like at most big banks.

Credit unions also pay interest on their checking accounts, generally, but rates vary greatly from one institution to another. If earning interest is important to you, check at least 3 institutions to compare rates – this information is generally available on their websites.

ATMs

Some other things to consider would be a bank’s ATM network. Big banks generally have large, nationwide ATM networks, which could be a benefit if you travel frequently and need access to your cash. Credit unions have a good local presence, but options can be sparse nationally. Online banks often do not have standalone ATMs, but offer to refund any fees you incur.

Online Banking and Bill Pay

All of the bank types I surveyed offered online banking and bill pay services free of charge, and many are also offering mobile banking with things like mobile check depositing. The big banks and online banks certainly have more to invest in their online systems, while credit union services might be a little more clunky.

Again, everyone’s needs are different, which may sway you in a particular direction. My husband and I use a local credit union because they offer great interest rates and have a strong local network of ATMs. We also like their nonprofit status (meaning they act in the best interest of members, rather than focusing on profits).

What type of bank do you use for your checking account and why? I’d love to hear your thoughts in the comments below.